Hotelling's model has been used to describe differentiation in the political "market." Suppose that 100 voters are evenly distributed between the extreme left and the extreme right on the political spectrum, and that all voters vote, and they always vote for the candidate closest to them on this spectrum. The numbers on this spectrum represent the number of voters lying to the left of the number. So, at the midpoint, fifty voters lie to the left and fifty to the right. At the extreme right end, all 100 voters lie to the left. To an economic naturalist, this model helps explain why political candidates:

A. are loyal to their political parties.
B. work to bring federally funded projects to their home districts.
C. move toward more centrist positions during campaign season.
D. take more extreme positions than are held by the general population.


Answer: C

Economics

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In an open economy, the current account balance equals ________. (Assume that the capital account is zero and net transfers are zero.)

A) net foreign investment + domestic investment B) net foreign investment C) net capital outflows D) the financial account balance + net income on investments

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Which is the best example of idiosyncratic risk?

A) a financial crisis B) a lawsuit because the corporation produced a faulty product C) a recession D) rising interest rates

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Very Technical is a firm that sells computing equipment. It costs Very Technical $50 for each order of computer monitors and the variable cost of placing an order is $2 per monitor. Very Technical pays an annual holding cost of $6 per monitor. If Very Technical sells 1,000 computer monitors a year and they order 25 monitors, what is the total annual cost of the monitors?

A) $7,250 B) $4,075 C) $3,150 D) $5,025

Economics

For a firm in a perfectly competitive market, if it is producing at a level of output where marginal costs are less than marginal revenue it:

A. is producing a profit-maximizing quantity. B. should invest more in advertising in order to raise revenues. C. should cut back production to increase profits. D. should increase production to increase profits.

Economics